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Home » Technology & Innovation » Online Lenders Are Disrupting the World of Small Business Financing

Kevin Clark

Chair, Canadian Lenders Association & President, Lendified

Small business owners have more choices than ever before when it comes to acquiring the capital they need to grow their business, thanks to the development of online solutions. Small business loans in Canada used to be the domain of traditional lenders, like the Big Five banks, but data-driven machines have changed the way credit is distributed.

Data-driven lending solutions disrupt the traditional landscape of small business financing

“It all comes down to the way lenders assess borrowers, and how technology drives that process,” says Kevin Clark, Chair of the Canadian Lenders Association and president of Lendified — a leading online small business financing company. “Traditionally, assessing small business loans is difficult and time-consuming. But with the development of data-driven technology and machine learning, access to capital has come a long way, and that’s really benefiting the economy and small business owners.” 

Getting approved for a large, long-term loan by a traditional lender can take weeks and carries a variety of restrictions. Meanwhile, online solutions use technology that considers more than a business’ credit score to assess their risk. This allows companies like Lendified to offer small business owners quick access to capital with fewer restrictions and minimal hassle.

“Relative to other online lenders our credit is a little more conservative and shorter-term,” says Clark. “Our rates are a little higher than borrowing from a traditional lender, but lower than for many other online lenders.” For business owners looking for quick access to capital at a competitive rate, going with an online lender may make the most sense for their needs.

For business owners looking for quick access to capital at a competitive rate, going with an online lender may make the most sense for their needs.

Three tips for choosing the right financing for your business

Clark says that there are three crucial things to keep in mind when choosing between lenders.

First, assess the purpose of the capital you’re trying to borrow. How much money do you really need, and how quickly do you need it?

Second, before settling on a lender, make sure to understand the cost of the capital. Dealing with a lender who is transparent about rates and fees is essential.

Third, aim to match your liabilities to your assets. Longer-dated assets should incur longer-dated liabilities. If you want to buy a piece of equipment that will last five years, the loan should last about that long. For shorter-term assets, like advertising or buying inventory, a short-term loan from an online lender may be your best option.

How Lendified helps small businesses grow

Lendified leverages data-driven technology to speed-up the loan process, giving small business owners quick, efficient access to capital. The online application is simple and streamlined — using machine learning, the company is able to extract a large amount of information with a relatively small number of data points.

With Lendified, a small business owner can get pre-approved for a loan within seconds and receive a final offer within about 40 minutes, compared to the weeks or months it would take with a traditional lender.

“Lendified aims to be the next best thing to a traditional bank,” says Clark. To this end, Lendified emphasizes a completely transparent approach to fees, a convenient biweekly repayment structure, and more competitive rates than many other online lenders.

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